Glasgow agreement and Pakistan—II

Coal gasification

Major energy source remains to be Thar coal. Thar coal can be liquefied to produce gas (SNG). It is a tried and tested technology. There are more than 125 coal gasification plants, out of which 75% are in China.

The Chinese have been taking interest in coal gasification proposals and under grave circumstances they may be cajoled to cooperate in building coal (Thar) conversion plants to gas and diesel, etc. One may have to convert the existing imported coal power plants to at least 20% on Thar coal. Cement and other industries also rely on imported coal. One may have to enhance Customs duties on coal imports to make the local substitution attractive.

Coming back to the climate change and net-zero issue, in the mid-term (after 2030) Pakistan could add Carbon Capturing facilities to its coal plants to satisfy the climate expectations and requirements. Coal gasification may be converted to produce the so-called Blue Hydrogen. Blue Hydrogen is the Hydrogen that is produced out of fossil fuels like Gas and Coal but with added carbon capturing. This is the path that many advanced nations like Japan and Australia are taking, albeit partially.

The difficult issue is of timing and probable stranding of energy assets and investments during and after transition. It is highly likely that after achieving some progress towards net-zero by 2030, advanced nations may introduce ‘carbon tax’ and trade restrictive practices in the form of tariff and non-tariff barriers on the countries which may not achieve imposed targets towards net –zero.

Green hydrogen initiatives in South Asia

Bangladesh Council for Scientific and Industrial Research has installed a pilot hydrogen plant in Bangladesh to produce hydrogen and another is on the way. The plant is based on household waste gasification with an output of 5.8 kg/day which can go up to 29 kgs. It has cost them USD 6.48 Million. India plans to play a major role in hydrogen sector aiming to be the cheapest producer and exporter in the world eventually.

A draft policy requires to meet 10% of the oil refineries’ hydrogen requirement by green hydrogen by 2024 and later in next 5 years to 25%. Leading Indian companies have active plans to go into smaller hydrogen facilities initially.

Reliance wants to install an electrolyzer and a fuel cell manufacturing facility as well along with Solar PV panel manufacturing. Indian Oil Corporation (IOC) has announced a green hydrogen plant at its refinery in Mathura (UP). OIC wants to install another facility at Kochin where hydrogen fuelled buses would be plying at the airport. India is also experimenting with mixing hydrogen in natural gas pipelines in one of the districts.

Hydrogen economics

Presently, green hydrogen is very expensive; also there are supplies and infrastructure issues. Green hydrogen, however, is 4USD/kg (34.8 USD per MMBtu) and above in the US based on the latter’s low gas prices. Grey hydrogen (based on cheap natural gas in the US) is, however, available at 1.5 USD per kg (13.05 USD/MMBtu).

There were targets to bring down the green hydrogen price to 2 USD per kg by 2030. These targets have been, however, revised by US’s DOE (Department of Energy) to USD 1.0 per kg by 2030. This kind of targeting appears to succeed a la solar PV prices.

In fact, a Norwegian company, NEL, has announced producing green hydrogen at1.5 USD/kg already as early as 2025. These are, however, based on renewable energy input of 2 USc/kWh, something that other countries may not be able to achieve easily.

The Glasgow Conference has softened its stand on coal under Indian and Chinese pressure. Pakistan may also reexamine its earlier announcement of not building coal (Thar) power plants anymore. Coal gasification should be pursued with urgency due to the LNG prices and availability issues which may occur cyclically again.

Coal gasification could be converted to hydrogen production easily when required and ‘carbon capture’ could be installed as well in the long run avoiding stranded asset possibilities. There is, however, a big if of Chinese readiness in it. Expanding Thar coal output is also required to indigenize the coal requirement of the cement and other industrial sectors which can reduce the import bill by 1 billion USD. Thar coal can be mixed up to 20% in the new imported-coal based power plants.

Green hydrogen is also based on solar and wind. Thus solar and wind power are the basic technology and resources that we must develop. Electrical vehicles will replace some oil consumption from the transport sector. Solar and wind power equipment’s prices have been coming down.

Efforts should be made to bring the local prices to the international prices of 2-3 USc per kWh. There are other options like biogas and solar water heaters, which can fill a significant gap up to 20% probably. Bio-CNG and community biogas plants could be an attractive option.

Initial market for hydrogen is provided by oil refineries, which require hydrogen for desulfurization. Fertilizer plants would be the next candidates for on-site hydrogen production. Karachi-based oil refineries should be the first candidates for such a venture.

Home and industrial sector would require dedicated transmission and distribution infrastructure, although up to 10% hydrogen can be mixed with natural gas in the existing system. Municipal Solid Waste (MSW) could be utilized in hydrogen production improving the economics of both hydrogen and MSW disposal.

It appears that hydrogen may not be market relevant in Pakistan before 2030. However, it would be an essential part of energy security of Pakistan in the mid to long term. All of the aforementioned would require R&D and pilot scale hydrogen facilities to increase the local know-how and local content when hydrogen is inducted into the system. Eventually, international oil companies and others would be handling hydrogen as they do oil now, drawing upon both local production and imported one.

Energy transformation would need a lot of capital which is not being provided by the advanced nations. It is almost half a century up to 2070 and 29 years up to 2050. Taking a dim view, conversion would be forced upon us by the circumstances and we would be importing hydrogen as we import oil and gas today, but electricity cannot be imported. Saudi Arabia has already started making big investments in hydrogen. Long-term infrastructural planning should have an eye on these long term indicators.

Concluded

(The writer is former Member Energy, Planning Commission and author of several books on the energy sector)

Copyright Business Recorder, 2021